In a setback for Jaypee Infratech's lenders, the National Company Law Appellate Tribunal (NCLAT) has overturned the National Company Law Tribunal (NCLT) order directing the return of 758 acre land to the company under Insolvency and Bankruptcy Code (IBC).
The 758 acre land parcel had earlier been used as security for loans that have been taken by Jaypee Infratech's parent Jaypee Associates.
The parent company has essentially used Jaypee Infratech’s assets to secure loans for itself. Since assets of a subsidiary have been used for loans by a parent firm, NCLT in May this year declared it a fraudulent transaction. It had raised questions as to how a parent company was using the assets of its subsidiary.
A challenge had been moved before the NCLAT in this regard and on Thursday the NCLAT held that the transaction was perfectly normal.